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2016 (8) TMI 263 - ITAT DELHI

2016 (8) TMI 263 - ITAT DELHI - TMI - Undisclosed gift receipts - creditworthiness and genuineness - Held that:- Before the ld Assessing Officer assessee could not satisfactorily explained the doubts raised by the Assessing Officer about the genuineness of the transaction. As the assessee could not prove the creditworthiness of the Sh. Jagdish Mangala and genuineness of the transaction before the ld Assessing Officer and further the ld CIT(A) has deleted the addition without giving any reason an .....

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RISHI, ACCOUNTANT MEMBER For The Assessee : Sh. Vinod Kr. Bindal, CA Mrs. Sweety Kothari, CA For The Reveneu : Smt. Paramita B. Biswas, CIT DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is appeal filed by the revenue against the order of the ld CIT (A)-I, New Delhi dated 01.03.2011 for the Assessment Year 2001-02. 2. The revenue has raised the following grounds of appeal:- 1. The Ld. CIT (Appeals) is not correct in law and facts. 2. The Ld, CIT(A) has erred in both on facts and in law while acc .....

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usted against revenue receipts. 3. The Ld. CIT(A) erred in deleting additions made on account of ground rent which was retained by the assessee and had been utilized for the expenses of the firm. 4. Whether the Ld.CIT(A) was justified in deleting the addition made on charging on interest on late payment. 5. Whether the Ld. CIT(A) was justified in deleting addition made on account of cancellation charges out earnest money. 6. Whether the Ld. CIT(A) was justified in deleting addition for which the .....

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d on 08.10.2008 submitting the total income of ₹ 2287516/-. Against this the assessment was framed on total income of ₹ 6037817/. The matter was carried before the ld CIT (A) who in turn deleted some of the disallowance which are contested before us in this appeal. 4. The first ground of appeal is general in nature and therefore dismissed. 5. The second ground of appeal is against registration of electrification charges of ₹ 912427/-. Before us the ld AR submitted that this iss .....

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. We have carefully perused the order of the coordinate bench dated 25.05.2012 wherein in para No. 3 of the appeal issue of addition towards and electrification charges was considered in case of the appellant for AY 2002-03 and in para No. 6 the addition has been deleted. The ld CIT (A) has followed the decision of the another assessee which has been confirmed by Hon ble Delhi High Court. Further the identical issue in the case of the assessee himself has also been decided in AY 2003-04 and seve .....

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t this fact and also could not submit that how the facts are different in this year compared to the decision of coordinate bench in the case of the assessee and others on the same issue. 8. We have carefully considered ground No. 4 in para No. 16 of the appeal of the assessee for AY 2002-03; the coordinate bench has decided this issue deleting the addition of ₹ 25374/- for AY 2002-03. We do not find any change in the facts and circumstances of the case and therefore following the decision .....

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not submit that how the facts are different in this year compared to the decision of coordinate bench in the case of the assessee and others on the same issue. 10. We have carefully considered the ground No. 4 of this appeal as well as ground No. 5 of that appeal and we are convinced that there is no change in the facts and circumstances of the case. The coordinate bench has set aside the issue to the file of AO as per para No. 20 to 22 of that appeal. Therefore, following the decision of the co .....

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issue is squarely covered in assessee s own case by the order of coordinate bench for AY 2002-03 wherein in ground NO. 6 the addition of ₹ 764500/- is deleted for that year. Therefore, he submitted that the above decision may be followed. The ld DR also submitted that facts of that case the impugned case before us is identical. 12. We have carefully considered and also perused the page No. 12 wherein ground No. 4 in para No. 12 the identical issue has been decided by the coordinate bench c .....

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explained investment. This addition is deleted by the ld CIT (A). The brief facts of the gift noted by the Assessing Officer in para No. 5 of the assessment order is as under:- 5. Gifts As per the materials seized/impounded during the course of search and connected survey operations, the assessee has received gift during the year, the details whereof are as under:- SI. No. Annexure details Name of the Donor Relationship with the Donee Date Amount (in Rs.) 1. A-23, S-2, Page No. 1 & 2 Sh. Jag .....

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se whatever amounts are deposited in the account are withdrawn within two/three days leaving a meager balance in the account. Since there is no justification for the gifts made by a person who is not related to the assessee or any member of family, it can safely be concluded that the impugned gift represents the unaccounted money of the assessee routed through Sh. Mangla to benefit the assessee. The assertion of the assessee that the gift was given out of natural love & affection does not ar .....

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(HUF) in F.Y. 2008-09 wherein it was concluded by the AO that Sh. Mangla did not have the creditworthiness to make such gifts. Replying to the Show Cause, the assessee filed some documents purported to be copies of returns of Sh. Jagdish Mangla for the A.Y. 2001-02 and final accounts of the said assessee, which showed withdrawal of ₹ 3,07,29,6217- for the capital account from the assessee, thereby trying to meet the objections raised in the assessment proceedings of his HUF. However, a cl .....

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1-02 appears to vary from his signatures on similar documents for A.Y. 2000-01 as also from the gift deeds signed by the donor. In A.Y, 2001-02 after signing Sh. Jagdish Mangia draws two lines with a break under his name. In A.Y.2000-01, after signing he draws one unbroken line and below that places two dots. c. Both returns are purported to be filed in Ward 19(2), New Delhi, but the stamp of the ITO in the return of A.Y. 2001-02 is different from the stamp in A.Y. 2000-01 and it does not contai .....

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aming assessment for the assessee HUF in the A.Y. 2001-02, the assessing officer had after conducting an analysis of the gifts received by the assessee and his family members recorded the following observations; (a.) Almost all this gifts have been given in the period between October,2000 and August, 2001. A few stray gifts have been given in the fast two or three months of F.Y. 2002-03. (b.) No gifts have been received before this date and very few gifts have been received after the period in q .....

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ccount of most of these donors were examined, and it was found that these bank accounts appeared like the bank accounts of entry operators, in that, large amount of money were credited, to these bank accounts, only to be withdrawn the next date or immediately thereafter in the form of cheques to various parties among which were -the gifts to the assessee. Summons were also issued to most of the donors so that they could confirm the gifts made to the assessee however, none of the donors appeared .....

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9 of IT Act, 1961. 15. On appeal before the ld CIT(A) by assessee the addition of the gift was deleted vide para No. 8 of the order wherein ld CIT(A) relying on his own order for AY 2001-02in case of Kamal Kishore Agarwal. He further stated in that appeal that it was concluded by him that all evidence produced by the assessee proved the identity and creditworthiness of Mr. Jagdish Mangala and further genuineness of the transaction of gift received from him. Therefore evidence produced in the cas .....

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the donor. He further relied on the decision of Hon ble Delhi High Court in case of CIT Vs. Novadaya Castles Pvt. Ltd. 367 ITR 306. He further submitted that before the Assessing Officer the genuineness of the transaction was not proved and therefore the addition is rightly made. He further stated that ld Assessing Officer has in detail raised several contentions and none of them were dealt with by the ld CIT (A) and therefore the order of the ld CIT(A) may be reversed. Against this ld AR submi .....

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.2007. During the course of search some material were seized and impounded wherein annexure A-23/S-2 page 1 and 2 was found which was dated 09.12.2000 wherein Sh. Jagdish Mangala has given a gift of ₹ 20 lacs to the assessee. During the course of search summons were issued to the donor but could not be served as he passed away on 24.06.2002. On examination of his bank statement the ld Assessing Officer noted that the donor is an accommodation entry provider. It was further noted by him tha .....

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appeal No. 334/09-10 in case of Kamal Kishore Agarwal for AY 2001-02 wherein a gift of ₹ 21 lacs from Mr. Jagdish Mangala was deleted. The order of the ld CIT(A) in appeal No. 334/09-10 dated 28.02.2011 is also produced by the ld AR. However, on going through para No. 4 and 4.1 of the above order he deleted this addition because of his decision in ground No. 3 in appeal No. 97/08-09 in the case of Sh. Kamal Kishore Agarwal and sons (HUF) for AY 2001-02 wherein the said person i.e. Sh. Jag .....

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e order of the coordinate bench in ITA NO. 2511/Del/2011 of Sh. KK Agarwal and has claimed that the issue is covered in the favour of the assessee. We have carefully perused the order which is placed at page No. 103 to 108 of the Paper Book. The above order has dealt with the gift of ₹ 21 lacs received by Sh. Kamal Kishore Agarwal. In that case the coordinate bench has deleted the addition holding that during the course of search no incriminating documents were found. In the present case t .....

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the ratio of that decision in ITA No. 2511/Del/2011 dated 30.09.2015 does not apply to the facts of the case. The ld DR has relied on the decision of Hon ble Delhi High Court in case of CIT Vs. Nowadays Castes Pvt. Ltd. (supra) wherein, Hon ble High Court has held that in those cases there was an evidence and material to show that the share holder company was only a paper company having no source of income but had made substantial and huge investment in the form of share application money and t .....

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en a gift of ₹ 51 lacs at least collectively to the assessee, Mr. KK Agarwal and Mr. KK Agarwal HUF. Further the ld Assessing Officer has alleged that Shri Mangala is an accommodation entry provider and his bank account also shows that amount deposited is immediately withdrawn within 2 to 3 days leaving a meager balance in the bank account. the assessee before the Assessing Officer as well as before ld CIT(A) could not state even what business Mr. Jagdish Mangala is carrying on which justi .....

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ssessing Officer and further the ld CIT(A) has deleted the addition without giving any reason and merely relying on some other orders and not examining the current impugned transaction of the gift. Further we also draw support from the decision of Honourable Delhi high court in Pawan Kumar Agarwal V CIT 373 ITR 0301 ( Del) where in identical circumstances where it is held that 7. The Tribunal in the impugned order has not specifically referred to section 68 of the Act but when we notice and read .....

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th deposit of ₹ 5,100 and, thereafter, a cheque of ₹ 1 lakh was deposited on August 18, 1992. On the same date itself, two cheques were issued in favour of Prayag Polymers (P.) Ltd. During the course of assessment proceedings, the assessee was asked to prove and establish the donor's capacity to make the gift, relationship between the assessee and Bhupinder Kumar and also to produce a copy of assessment order made by the tax authorities of the country in which Bhupinder Kumar was .....

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gift was a conduit for funnelling his own undisclosed money. The Commissioner of Income-tax (Appeals) has only relied upon section 5(1)(ii)(b) of the Gift-tax Act, 1958, to hold that the addition could not be sustained. He, however, accepted that the relationship between the donor and the donee had not been established. As far as production of assessment order in respect of the donor was concerned, it was observed that Bhupinder Kumar was not liable to be taxed in India and, therefore, producti .....

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onsideration the paper/documents, which were executed but the surrounding circumstances are also relevant. These aspects are of significance and importance, when the genuineness of a transaction is in issue. A gift is a voluntary act, by a person who out of love and affection transfers of money, movable or immovable asset to another person. Element of personal and close relationship between the two is the motivating factor as the donor parts with and transfers what belongs to him to someone, who .....

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ding love and affection was apparently a mere formal proclamation. It was a wrong and incorrect assertion. The assessee does not plead past relationship and why and for what reason the said Bhupinder Kumar felt the urge and desire out of love and affection to make a gift to Aushi Aggarwal, the minor daughter of the appellant-assessee. The assessee could have explained and shown that the said Bhupinder Kumar was known to him but his contention was that he was not required to show and establish th .....

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whom the payment was received, the source of payment, which necessarily need not be confined only to the details of the bank account from which payment was made but also corroborating and the surrounding circumstances. This has always been the legal position, even prior to the insertion of section 68 of the Act. It was a well-accepted principle that income/cash credits which are not satisfactorily explained might be assessed as income. Even long prior to the introduction of section 68 in the st .....

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